Resolving the financial issues in divorce

In England the proceedings are about resolving the financial issues arising from the marriage are distinct from the divorce itself. In the event of divorce disputes over finances can be very bitter and, if there are significant assets involved, it is vitally important to take professional advice. Even if the issues can be resolved quite amicably (and that is best if at all possible) it is still sensible to take legal advice before coming to any final agreement because you can only negotiate meaningfully if you know what your rights are. It has to be said that many people do not feel that the present rules are fair at all.

Basically, when a couple divorce (or seek a dissolution of a civil partnership) a court can, and very often does, divide up the matrimonial assets, his, hers and theirs, in any way it sees fit. Of course, it does not do this in an arbitrary way. There are well understood principles and rules involved. Nevertheless, the court does have a wide range of discretion. Regardless of whose name the property is in a court may order it to be transferred to the other and this applies to all property owned either by husband or wife as well as that which may be owned jointly. The rules for unmarried couples are very different and it is important to be quite clear about this. It is divorce (or judicial separation) which gives the courts jurisdiction to make these orders and they are not applicable to couples who are not married (whether of different sexes or not). The widespread notion of the “rights” of a “common law wife” is a myth.

People also often talk about “pre-nuptial agreements” and presumably these have crept into the common consciousness because of US influence in the media. It is certainly true that they are often valid in the US but they have not traditionally had binding force in UK law although unmarried couples can make binding agreements which are effective so long as they remain unmarried. In England and Wales the courts have the last word in the division of all the matrimonial property on divorce and in the past they have not hesitated to ignore any pre-nuptial agreement. It is true that more weight is now attached to prenuptial agreements than used to be the case but it is important to understand that the court has the last word

The rules which a court applies in dividing the matrimonial assets are set out in Section 25 of the Matrimonial Causes Act 1973 which enumerates the factors which should be taken into account. In point of fact what the court does in the vast majority of cases is to look at the financial needs of the parties (including those of any children of the marriage) and divide the assets and income up as it perceives those needs. Indeed, so far as property division in a divorce ancillary relief application is concerned the family courts can almost be regarded as applying the maxim “from each according to his ability to each according to his needs”.

It is important to be aware that decisions affecting the division of matrimonial property after divorce are made by the courts (except in extremely unusual circumstances) quite independently of the reason for the divorce itself. The latter only very rarely has any impact whatever. For instance, whether one spouse has committed adultery is irrelevant to how a court will decide financial issues between the two spouses. Similarly, decisions affecting the children (residence, contact, access etc) are made using quite different criteria. The process of resolving the financial issues of the marriage stands on its own and needs to be dealt with as an issue quite independently from the other two.

Finally there are specific issues about divorce of concern to men in particular to which it is wise to pay attention if the man is not to come out of the process feeling aggrieved and embittered. It is very important that the husband understands the legal framework if he wants to utilise the rules instead of becoming their victim. Most divorce petitions are, in fact, presented by wives so  the husband is often taken completely by surprise and has to learn fast.

Individual financial circumstances are almost always different in each case and the decision does not rely upon the mechanical interpretation of rules. To assess what the likely outcome would be in a given case requires a “feel” for the decisions of the courts and it is for this reason that most divorcing couples would be wise to take professional advice about these financial matters. This the area of divorce where the advice of a specialist divorce solicitor adds most value. Such advice almost always pays for itself many times over.

To find out more about resolving the financial issues arising from a marriage please continue.

Spouses involved in divorce in England always want to know on what basis the UK divorce law decides financial issues between husband and wife if the Courts have to decide the issue. Indeed, this is what is at the heart of most divorce cases. If there is a dispute it is more likely than not to be about money whether that is about periodical payments for a spouse, dividing the equity in the former matrimonial home or divorce and pensions. In fact, the relevant principles are set out in Section 25 of the Matrimonial Causes Act 1973 which, essentially, reads:-

”It shall be the duty of the court in deciding whether to exercise its powers ….. to have regard to all the circumstances of the cases, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.

25 (1) It shall be the duty of the court in deciding whether to exercise its powers …. to have regard to all the circumstances of the case including the following matters, that is to say –

(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future;

(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;

(c) the standard of living enjoyed by the family before the breakdown of the marriage;

(d) the age of each party to the marriage and the duration of the marriage;

(e) any physical or mental disability of either of the parties to the marriage;

(f) the contributions made by each of the parties to the welfare of the family, including any contribution made by looking after the home or caring for the family;

(g) …the value to either of the parties to the marriage of any benefit (for example, a pension) which … (by reason of the divorce) ..that party will lose the chance of acquiring;…”

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